Re-entering society can be a challenging time. Filing taxes may add to that complexity. Here’s what you need to know about filing taxes if you are a returning citizen or currently incarcerated.
1. You may be eligible for tax credits
Tax credits reduce the amount of taxes you owe and may provide a refund at tax time. Even if you are not required to file a tax return, you may still qualify for tax credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit.
Income earned in prison does not qualify for the EITC or the CTC. You may still be eligible for tax credits if you receive income from other sources, such as income earned before incarceration or income earned by a spouse who is not incarcerated.
Additionally, as part of COVID-19 relief, Congress issued three rounds of stimulus checks, which people who are incarcerated are eligible for. If you missed out on your stimulus checks or didn’t get the full amount you are eligible for, you can claim the money as the Recovery Rebate Credit on your tax return.
To claim the credits, all you need to do is file your taxes. Even if you aren’t eligible for tax credits, filing your taxes is beneficial. Your taxes serve as proof of income that you can use in the future for renting a home or applying for loans. It also provides a record of your work history which is needed to qualify for social security benefits.
2. You can still file taxes for previous years
If you did not file taxes in previous years due to incarceration, you have three years from the due date of your last tax return to claim any credits or refunds for which you may have been eligible.
If you did not file taxes and owe money, you may be subject to penalties and interest. If you can’t pay the full amount, you may qualify for a payment plan, tax debt settlement, or temporary collection delay from the IRS. Visit your nearby Taxpayer Assistance Center (TAC) or Low Income Taxpayer Clinic (LITC) for help.
3. There are ways to file your taxes if you are currently incarcerated
If your stay is temporary: If your prison term is temporary, file for a tax extension. The extension allows you to file after the tax deadline. Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, will give you a six-month filing extension. You must file this form by the regular tax deadline, which is April 18, 2022.
If you are incarcerated for an extended amount of time: You have a couple options. In-house tax or lawyer services may be available to you for tax assistance. Another option is to designate Power of Attorney to someone you trust to file your taxes and take care of your finances. You must complete Form 2848, Power of Attorney and Declaration of Representative to assign someone power of attorney. The form requires your and the person you chose’s signature. The signed form must be submitted with the tax return. Your Power of Attorney may have to be notarized depending on state laws.
If you are filing with a spouse: Your spouse can complete the tax forms on your behalf and either bring or mail them to you for signing.
5. Free tax assistance is available
For free in-person tax services, Volunteer Income Tax Assistance (VITA) and Tax-Aide provide free income tax assistance for those who earn less than about $57,000 a year. Accuracy is prioritized: tax preparers at these sites are IRS-certified annually and all returns are reviewed by a second tax preparer. Tax-Aide, which is run through the AARP, primarily serves seniors, although they cannot turn younger clients away. VITA offers free tax preparation for workers regardless of age. Find your local VITA site here, and find your local Tax-Aide site here.
For free virtual tax filing services, Code for America, in partnership with VITA, has created a full virtual intake process for free tax assistance. Visit Get Your Refund to connect with an IRS-certified volunteer who will help you prepare, review, and file your taxes. Code for America’s Get Your Refund service is free for those who earn less than about $66,000.
For free online tax preparation, MyFreeTaxes is an easy online tool that helps you file your taxes for free. This is a good option if you’re comfortable using computers and confident preparing your own taxes.
If you encounter hardship or difficulties in filing your taxes, contact a LITC for free legal help on tax issues or your local Taxpayer Advocate Service (TAS) if you need help resolving specific tax concerns.